Realities of Today’s Commercial Insurance Market: Willis Towers Watson

April 26, 2017

Cyber insurance remains robust and the casualty market remains tight. Workers’ compensation costs are generally stable, and the property market continues to decline, Willis Towers Watson said. Overall, the firm sees a mix of increases, decreases and flat rates in various commercial insurance lines through the rest of 2017.

Here’s the rundown according to Wills Towers Watson:

The property market should have a property rate decline of 5 percent to 10 percent for companies without a big exposure to natural disasters, and 5 percent to 12.5 percent for carriers with more exposure. This prediction stands even with deteriorating underwriting results and a 32 percent jump in year-over-year catastrophe losses. Importantly, abundant capital keeps the market attractive for buyers, Willis Towers Watson said.

Most companies and industries are experiencing a continued favorable casualty market, according to the report. Willis Towers Watson noted that New York City construction projects, plus energy and trucking risks, are facing a tight casualty market.

Worker’s compensation costs should see increases and dips of about 2.5 percent, depending on the state. Overall, Willis Towers Watson said the segment will continue with generally stable costs. There are trouble spots though, in states with employers who have large payrolls: Massachusetts, New Jersey and New York, among others. Willis Towers Watson also points to Florida as another point of concern, because of legislative change in 2016 and court rulings that lead to an average approved rate jump of 14.5 percent.

Cyber renewals will see premium hikes of 5 percent to 10 percent for most buyers, and 15 percent to 20 percent for point-of-sale retailers and large health care companies with no loss experience, Willis Towers Watson said. This reflects a robust cyber insurance market, according to the report. One qualifier: premium increases will be lower for organizations that can show strong risk controls.

A record number of Q1 securities class action filings could reverse a soft directors and officers (D&O) market. For now, D&O remains sluggish due to ample capacity and competition in the financial and executive risk lines. Buyers can get more value with their D&O coverage through innovation in areas including investigations, cyber-related D&O protections and M&A exposures, Willis Towers Watson said.

Expect 4 percent to 5 percent rate increases for self-insured employee benefit plans, and 7 percent to 8 percent for insured plans, Willis Towers Watson said. Until the government addresses the Affordable Care Act in terms of repeal or replacement, the rate trend remains uncertain, according to the report.

Source: Willis Towers Watson

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